The Day at a Glance | August 10 2023

*Inflation in the US surprised markets with a slower than expected annual uptick, also accompanied by a slower annual increase in the underlying component. 

*New unemployment claims increased more than expected (230 thousand), by reaching 248 thousand claims (a one-month high) in the week ending on August 5th. 

*The European Central Bank published its economic bulletin this Thursday. 

*Today at 1:00 PM (Mexico City time), Banxico will announce its monetary policy decision; markets expect the Governing Board to maintain the reference rate at 11.25%. 

*The US government announced new regulations that prohibit American investment in advanced technology industries in China, particularly in artificial intelligence. These measures, described by the Biden administration as national security measures, aim to prevent both American-origin knowledge and money from reaching China amidst tensions between the two countries.

Economic environment

Inflation in the US recorded slight acceleration during July – to 3.2% from the previous 3.0%. With this reading, the 12-month streak of declining inflation came to a halt; however, this reading was lower than the 3.3% expected by the analysts´ consensus. On a monthly basis, the 0.2% reading set in line with market estimates. Housing prices continued increasing at a rate of 0.4%, accompanied by a slight acceleration in food prices (0.2% m/m). However, this was offset by a significant slowdown in energy prices (0.1% m/m vs the previous 0.6% m/m). Similarly, the decline logged in used (-1.3% m/m) and new (-0.1% m/m) vehicles contributed to the surprising decrease in core inflation (4.7% y/y). Even though there was an uptick in general inflation, this was expected by analysts and was tempered by the positive surprise in the underlying component.